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05/21/2003

Despite Slower Growth in the U.S., IDC Still
Optimistic About Future of AIP Services Market

FRAMINGHAM, MA – MAY 21, 2003 – The market for application infrastructure provider (AIP) outsourcing and managed services will likely grow at a percentage rate in the mid-teens over the next five years, a newly published IDC report reveals. Driven by customers' need to simultaneously leverage the Web, maximize infrastructure capacity, and reduce costs, the five-year growth from 2002 to 2007 for the worldwide and U.S. AIP outsourcing/managed services markets will be approximately 17.6% and 11.5%, respectively, according to IDC. While worldwide growth from 2002 to 2003 is expected to be 13.4%, U.S. growth for this same period will be 8.5%.

"Although growth in spending on AIP services in the United States is slowing due to a number of factors, we are cautiously optimistic about the future of the worldwide and U.S. AIP markets,” said David Tapper, analyst for the IT Outsourcing and Utility Services program at IDC. "This market will continue to grow over the next five years, driven largely by enterprise needs to leverage the Web in order to reduce and/or stabilize costs, improve efficiencies in areas such

as supply chains and internal operations, reach new customers through CRM and SFA capabilities, and find new markets. Further, this is a market that has not only become accepted as an integrated part of IT outsourcing, but also as a stepping stone to providing utility computing services."

Key trends in the AIP market outlined in IDC's study include the following:

Continued concentration and consolidation in the market, with IT outsourcers coming to dominate this space.

Continued decline in market share held by telecommunications providers.

Enhanced integration of AIP-managed services with general outsourcing offerings and utility-based services.

Increased customer demand for datacenter and server consolidation and optimization.

IDC believes that success in this market for any player will be based on a set of guidelines that include ensuring customer trust regarding vendor financial stability and viability and showing customers significant ROI by leveraging real-time reporting through Web portals. In addition, leveraging utility-based services to improve service and cut costs,

developing a mid-market strategy, and enabling end-to-end computing services from the application to the "access device" are additional critical elements to achieving and maintaining success in this market.

The IDC study, Worldwide and U.S. AIP Outsourcing/Managed Services Forecast and Analysis, 2002-2007 (IDC #29257), presents a fourth-quarter update to the five-year forecast for worldwide and U.S. AIP services. The purpose of this document is to identify and quantify the impact of recent trends influencing the AIP services opportunity for the forecast period of 2002-2007.

To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

For additional information about IDC's IT Outsourcing and Utility Services research, please contact, Virginia Lehr at 508-935-4188 or email at vlehr@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research, and exposition company.

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